Valence Technology, Inc. (VLNC), a developer of lithium iron magnesium phosphate energy storage solutions, said Thursday it has signed a stock purchase deal with Seaside 88, L.P. to sell 16.9 million Valence common shares in a series of closings every two weeks in the amount of 650 thousand shares each for a total of up to 26 purchases. Valence said it expects to close the first sale of 650 thousand shares for gross proceeds of $948 thousand.
Robert Kanode, Valence's president and chief executive officer said that the expected proceeds from this financing will be used for working capital and general corporate purposes, including the company's ongoing sales and marketing and research and development programs.
According to Austin, Texas-based Valence, price of the shares to be sold at the initial closing will be $1.45, a 12% discount to the 10 day volume weighted average trading price of the company's common stock ending October 14, 2009.
At each scheduled closing, price of the shares of common stock to be issued will be determined by applying a 12% discount to the 10-day volume weighted average trading price preceding the closing. If, with respect to any subsequent closing, the three-day volume weighted average trading price immediately preceding the closing is below $1.00 per share, then the closing will not occur and the aggregate number of shares of common stock that will be purchased under the agreement will be reduced by 650 thousand shares.
If the dollar amount of the investment on any scheduled closing date is more than double the amount of the investment on the prior closing date, then Seaside has the option to reduce the number of shares purchased on that date to an amount no less than double the amount of the investment in the prior closing date.
As per the agreement, private investment limited partnership Seaside has not sold short any of Valence's shares nor will do so in the future while it is a common stockholder. Meanwhile, Valence added that there are no warrants associated with this agreement, and it has the right to discontinue the agreement after six closings and under certain other conditions either party may terminate the stock purchases by Seaside.
VLNC is currently trading at $1.65 per share, down 3.51%, on the Nasdaq.
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